Costcutter chief executive Darcy Willson-Rymer has vowed to up the ante on the Tesco, Sainsbury’s and Morrisons as the battle for the convenience grocery market intensifies.
Willson-Rymer told Retail Week that the symbol group will be able to “compete much more effectively against the multiples” after striking a deal with wholesaler Palmer & Harvey this week.
The 50/50 joint venture will create the UK’s second-largest convenience store chain behind Booker’s Premier after Costcutter took over 800 Mace, Supershop and Your Store shops and formed a joint buying group with Palmer & Harvey which has left direct retail.
Willson-Rymer said the deal would give the buying group, named The Buyco, a combined purchasing power of £5bn. Costcutter now has 2,500 shops in its network, as well as 25 company-owned stores, and Willson-Rymer wants to double this store count.
He is targeting a group of 20,000 non-affiliated independent retailers as future Costcutter members.
Willson-Rymer said: “We are going to have to have consolidation in the convenience sector and we will start with buying power. I am inviting other symbol groups into our buying group.”
The move comes as the convenience grocery sector becomes increasingly competitive as Morrisons ramps up its presence in the market. IGD figures show the UK convenience market is worth £34bn is set to increase to £44bn by 2017.
Asda revealed it is to extent its click-and-collect service to more than 5,000 convenience stores through its partnership with CollectPlus. Shoppers will be able to pick up online orders in Costcutter and its competitors stores.
Asda’s own store service is available for orders of general merchandise products in all 566 Asda stores and for grocery in 86 stores. This figure will reach 200 by the end of 2013.